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Satya Nadella restructures Microsoft; former Nokia CEO Stephen Elop, three others to leave

Satya Nadella

Satya Nadella

Technology giant Microsoft Corporation has gone in for an organisational overhaul involving the departure of former Nokia chief executive Stephen Elop and three other senior executives.

The move, which comes as Microsoft readies to launch Windows 10, is aimed at refreshing the company’s faltering smartphone business.

“We are aligning our engineering efforts and capabilities to deliver on our strategy and, in particular, our three core ambitions,” Satya Nadella, the India-born CEO of Microsoft, said in a memo. “This change will enable us to deliver better products and services that our customers love at a more rapid pace,” Nadella said.

The new engineering structure would combine Microsoft’s existing operating systems and devices groups to form the windows and devices group (WDG), which the company believes will improve engineering alignment. Windows chief Terry Myerson will take on the additional responsibility of leading the WDG group.

The departure of Elop, widely regarded as the architect behind Microsoft’s acquisition of Finnish handset maker Nokia in a $7.2 billion deal in 2013, was largely unanticipated. A former Microsoft employee, Elop was Nokia’s CEO when the deal happened.

Nokia, which refused to mate its smartphones with Google’s Android operating system only to later adopt Microsoft’s Windows-based platform, was once the world’s top handset brand. It lost its way as Android-based smartphones and Apple’s own iOS powered devices took the world by storm.

It was hoped that under Windows’ creator Nokia may step up its sales and Microsoft could push its mobile OS better with a pedigreed handset maker. However, Windows-backed smartphone sales has struggled to penetrate the global market.

According to research firm IDC, Windows phone saw its global market share fall to 2.7 per cent last year from 3.3 per cent in 2013. During the same period, Google’s Android market share grew from 78.7 per cent to 81.5 per cent in 2014, while Apple’s iOS dropped from 15.1 per cent to 14.8 per cent.

In India, Microsoft’s Lumia devices (Nokia as a handset brand has been discontinued) have under 4 per cent smartphone market share. The Indian smartphone market is dominated by Android with a 92.8 per cent share while Apple’s iOS has 2.5 per cent, as per a report from Cunterpoint Research.

In India and other countries, Microsoft is betting big on Windows 10 as a platform to boost sagging sales. The Windows 10 platform will be free for manufacturers producing devices with screens that are smaller than nine inches.

Windows 10 will be available starting July 29 in 190 countries globally.

Elop, who took over as executive vice president of Microsoft’s devices unit after Nokia acquisition, was criticised for insensitivity last year. He had sent an email to colleagues that began with a friendly “Hello there” and then announced 12,500 layoffs in the 11th paragraph.

“With the structural change described above, Stephen and I have agreed that now is the right time for him to retire from Microsoft. I regret the loss of leadership that this represents, and look forward to seeing where his next destination will be,” Nadella said in his memo.

Two other Microsoft executives, Kirill Tatarinov (executive vice president of business solutions group) and Eric Rudder (executive vice president of advanced technology and education), are also set to leave Microsoft. Separately, Mark Penn, who had served in a senior strategist role, is also on his way out.

The exiting officials will “leave Microsoft after a designated transition period,” Nadella said.

The Hyderabad-born Nadella earned his Bachelor of Engineering in electronics and communication from the Manipal Institute of Technology. He went to the US to secure an MS in computer science from the University of Wisconsin-Milwaukee and followed it with a MBA degree from the University of Chicago.  Nadella started his career at Sun Microsystems, before moving to Microsoft in 1992. He replaced co-founder Steve Ballmer as Microsoft CEO last year.

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